New Home Sales Soar as Prices Drop; Market Favoring Florida Home Loan Buyers
While existing home sales are decreasing - as Florida home loan rates are rising - new homes sales across the country enjoyed their largest jump in 13 years last month. These figures got a boost from the fact that builders were forced to cut prices in order to cope with increasing rates and inventory.
This means it’s an ideal time to find a Florida home loan on a recently constructed house. You WILL receive a deal.
The government reported new homes sold at an annual rate of 1.21 million homes in March, up 13.8 percent from a revised 1.07 million pace in February. The jump, the biggest since a 16 percent rise in April 1993, came even as mortgage rates hit an average 6.32 percent last month for 30-year fixed-rate loans.
Rates rise, costs plummet, sales increase
With sky-rocketing mortgage rates driving up the cost of financing home purchases, most economists have been looking for the real estate market to cool off in 2006 after several years of record sales.
But economist Bob Brusca of FAO Economics said last month’s drop in new home prices is a sign that the market for new homes isn’t nearly as strong as the jump in sales would suggest.
He noted that the report showed an unusual drop in prices from both February and a year earlier, which could be a sign that home builders are cutting prices to move a large supply of new homes now on the market.
“New homes sales sprang back to life like a zombie in a cheap horror flick,” Brusca said. “And like that zombie, housing really is dead. Don’t let all that twitching fool you.”
He said that many of the new homes sold in March were probably built in a stronger real estate market.
Existing Florida homes versus new ones
Unlike existing homes, where sellers can live until they get an acceptable price, “builders can’t live in these houses unless they have a lot of family,” he said. “By and large they must finance them at rising interest costs.”
Average prices fell 7.1 percent from February to $279,100, after topping $300,000 for the first time in the February revised figures. The median price, which reflects the point at which half the homes sell for more and half sell for less, also fell 6.5 percent to $224,200.
And while month-to-month declines in home prices are not unusual, more significantly, prices also fell from a year earlier: a 2.2 percent decline in median prices and a 3.6 percent fall in average prices over that time.
New home sales, while a fraction of the overall Florida real estate market, are more closely watched since they’re more of a leading indicator of conditions in the housing market. Existing home sales are recorded at closing, typically a month or two after a purchase agreement, while new sales are tracked based on when Florida home loan contracts are signed.
